High success rates on navigation-related tasks do not necessarily translate into reliable decision making by foundation models. To examine this gap, we evaluate current models on six diagnostic tasks spanning three settings: reasoning under complete spatial information, reasoning under incomplete spatial information, and reasoning under safety-relevant information. Our results show that the current metrics may not capture critical limitations of the models and indicate good performance, underscoring the need for failure-focused analysis to understand model limitations and guide future progress. In a path-planning setting with unknown cells, GPT-5 achieved a high success rate of 93%; Yet, the failed cases exhibit fundamental limitations of the models, e.g., the lack of structural spatial understanding essential for navigation. We also find that newer models are not always more reliable than their predecessors on this end. In reasoning under safety-relevant information, Gemini-2.5 Flash achieved only 67% on the challenging emergency-evacuation task, underperforming Gemini-2.0 Flash, which reached 100% under the same condition. Across all evaluations, models exhibited structural collapse, hallucinated reasoning, constraint violations, and unsafe decisions. These findings show that foundation models still exhibit substantial failures in navigation-related decision making and require fine-grained evaluation before they can be trusted.